Spot gold was down by 0.1% at $1,956.39 per ounce by 1153 GMT. Prices hit a record $1,980.57 on Tuesday. U.S. gold futures rose 0.4% to $1,953.20 per ounce.
"When you're sitting on a very large profit, people want to take that," independent analyst Ross Norman said, adding the market was in a holding pattern ahead of the Fed's policy statement due at 2 pm EDT (1800 GMT).
Investors were also monitoring a political deadlock in the U.S. Congress over a $1 trillion aid plan.
"They're going to have to apply more stimulus in an economy struggling to get itself out of a hole and if they do increase monetary injection, it's going to be gold positive," Norman added.
Gold, considered a refuge against inflation and currency debasement following widespread stimulus, tends to benefit from low interest rates, which reduces the opportunity cost of holding the non-yielding metal.
Fed Chair Jerome Powell "may also comment on plans to anchor long-term interest rates at a low level by adjusting the forward guidance and possibly conducting yield curve control," Commerzbank said in a note.
"This would cement the negative real interest rates, in which case new record highs for gold and an increase above $2,000 per troy ounce would only be a question of time."
Investors continued to pile into gold-backed exchange-traded funds, with holdings in the SPDR Gold Trust at an over seven-year peak.
Gold also tracked moves in rival safe-haven the dollar, which lingered near a two-year low.
Silver fell 1.2% to $24.28 per ounce, platinum was little changed at $947.52 per ounce and palladium fell 1.4% to $2,250.75 per ounce.
By Eileen Soreng
